In an inspiring analysis of the national and international economic panorama, Católica-Lisbon School of Business and Economics challenges all its stakeholders to talk about their expectations and concerns for 2018. Thus, throughout the year, a series of conferences will be developed – under the name Knowledge@CatólicaLisbon – with the purpose of discussing and studying the main challenges for the country, selected by a panel of 25 thousand participants.

The first conference, held on February 5, aimed at launching the initiative and challenging civil society to join efforts and build a promising future for Portugal and for all of us. This conference was attended by Nuno Fernandes (Dean of Católica-Lisbon), Ricardo Reis, (Head of the Center for Applied Studies of the Catholic University), João Gomes da Silva (Administrator of Sogrape), Isabel Guerreiro (Head of Banco Santander), Paulo Pereira da Silva (President of Renova), and Ricardo Gonçalves Pereira (CEO of Yunit Consulting) who launched the challenge SME Heroes Awards.

Católica-Lisbon survey determines aging of the population, quality of justice and competitiveness as the main challenges for Portugal.

In this first conference – 2018 Challenges for Portugal – Nuno Fernandes (Dean of Católica-Lisbon) made an analysis of the national and international social and economic panorama, presenting the results of the survey that Católica-Lisbon launched to a sample of 25 thousand people from civil society. Respondents were asked to place 15 themes by order of importance, out of a set of about 50 themes representing the challenges proposed for 2018. From the results, it was determined that:

Nearly 55% of the respondents chose aging as a challenge, but the concern with this issue is greater among younger people;

54.3% of the respondents referred the quality of justice as one of the main challenges;

45.7% of the respondents expressed concerns about the competitiveness of companies;

Nearly 40% of the respondents were concerned about excessive bureaucracy and 37% were concerned with state dependence;

Challenges related to the organization of the state and the political situation of the country do not seem to be the first concern of the respondents (except for the situation of justice, obviously);

Challenges related to foreign policy (Brexit, situation in Spain, refugees, etc.) were also seen as marginal.

Survey respondents are between 17 and 71 years of age, with a mean age of 34.2. Of the sample, 43% are graduates, 25% have masters, 28% completed high school, 2% have a PhD and 2% completed basic education. Respondents with higher education are mostly from the areas of economics and management.

Under a premise of sharing, spread out in various moments throughout the year, we will identify, analyse and discuss the main challenges for Portugal. And consequently alert, guide, and assist economic, social and political leaders to make informed and thoughtful decisions on how best to overcome the challenges faced.

Testimonials

I think that one of the main challenges that Portugal faces is accelerating the digitalization of public processes. In other words, a challenge is to use technology to streamline several public processes that nowadays are still made using traditional means, and it can be broadly implemented. Let me give you a couple of examples. First, it should be possible to order and manage public transport cards -such as the LisboaViva card- online. Second, it should be possible to request your NIF online or to ask for an appointment with SEF online. Third, it should be possible to follow the status of certain processes online (e.g. driver’s license, doctor’s appointments, etc.). I can think of many other examples, but the idea is that processes that require people to make long queues, to fill paper forms with a pen, and to take several hours off work to organize something that could be easily done online should be completely removed. This is because I believe that the use of technology to replace traditional processes could increase the productivity and efficiency of the Portuguese people, and will make Portugal an even better place to live.

To Become the Hub for Talent and Innovation in Europe - The long-term economic prospects for Portugal are dire: with one of the oldest populations of any country in the world, a shrinking active labour force, low productivity, and a heavy public and private debt, Portugal will face significant economic and social challenges in future decades. Yet, 2018 promises to be a very benign economic environment with low interest rates, faster economic growth in Europe, and a continuation in the boom of tourism, real estate, and exports in Portugal that started in 2016, leading to strong employment growth.

In this benign environment, we have a unique opportunity in 2018 to reinforce the only viable positioning for Portugal – a Hub for Talent and Innovation. Portugal can only prosper in the global economy if we become the most attractive place in Europe to live, to work, to invest, to visit and to retire. We will need to embrace immigration of qualified people and the return of many of the talented Portuguese diaspora. We need to promote international business investment (in particular of innovative start-ups and multinational shared services centers alike). We need to ensure an inclusive and cohesive society, that is safe and welcoming. We need to strengthen the cultural, ecological, scientific and sports activities that attract global talent.

The good news is that we are already halfway into this path. Completing this path in strong alignment between private agents and public authorities is the way forward for Portugal.

The main challenge for Portugal is, still, a lack of capital, the dominat problem since the start of the century. The problems which caused the financial crisis remain lingering, not only in the levels of high debt and low credit, but also low savings. Net investment has been negative for most of the last decade, reducing productive capital. This adds to the structural problems with human capital, not only in education levels, but also in demographic numbers. This results in low labor productivity. Present growth is only managed by reducing unemployment, with no contribution from capital and productivity. Portugal during this generation has been a shrinking country, not only in physical but also economic terms. This trend must be reversed, which is very hard as the political and cultural orientations do not recognize the problem, being obsessed with consumption levels.

Retain qualified labor - in addition to a low fertility rate, Portugal has witnessed a mass departure of qualified labor. For future growth it is crucial to be able to attract and retain productive workers.

A long-term challenge: fertility - The number of births in Portugal has gone down in 2017 after an uptick in the previous two years. It is now clear the increase in those two years was just a transitory compensation for births delayed during the worse times of the economic crisis. As the economy normalizes, we go back to the trend of declining births. As a country, one of our most important challenges is to reverse this trend. Other countries have shown that policies matter and it is time for us to change ours. What should we do to encourage people to have more children?

A short-term challenge: tourism - Tourism has been responsible for a significant share of the Portuguese economy growth in recent times. Within tourism activities, the growth in local lodgings pushed by the likes of Airbnb has been quite remarkable. However, this trend has generated a pushback from those renters who loose from increasing real estate values and from those neighbors who bear some of the negative externalities stemming from the behavior of short-term stayers. There are now attempts to overregulate this activity and effectively kill the geese that lay the golden eggs. However, basic economics tell us that it should not be difficult to change these opportunities in win-win situations. How should we regulate local lodging so as to extract the most benefits to the most people?

I think a challenge is attracting and retaining excellent workers. Many smart and hard working Portuguese people move abroad for opportunities that pay better or have a better possibility of advancement. Comparatively fewer high-achieving foreigners move to Portugal. Government agencies like SEF, Segurança Social, Finanças, and IMT waste a lot of people's time. It may be a good idea to make these agencies more efficient and effective. It may also be a good idea for employers to make sure there is a connection between how well a worker performs and how much they are paid (consistent with former Google HR head Laszlo Bock's advice to "pay unfairly"), as well as making sure promotion is fair and based on a clear definition of merit. This is important because the cost of living in Lisbon is increasing rapidly.

Digital transformation will be major challenge for Portugal in 2018: Our studies at the Smart City Innovation Lab show that DT will increasingly affect individuals, organizations and the society as whole. While this is a challenge for Portugal it is also a major opportunity for everyone involved to position itself and get ahead of the (international) competition.